Frenemies

December 3, 2010

Putin and Medvedev are fighting behind the scenes of the Khodorkosvky trial.

A verdict in the trial of Mikhail Khodorkovsky—formerly Russia’s richest man and the founder of what was once the country’s largest private company, Yukos—is due to be read on December 15. Yet long before November 2, when Judge Viktor Danilkin of the Moscow Khamovnichesky District Court heard the final statements of prosecution and defense, adjourned the trial, and withdrew to his chambers to deliberate, the Moscow rumor mill had churned out a spate of likely sentences. They range from acquittal to the 14 years that the prosecutors asked for. In between, there is a “mild sentence” of three to four years or a sentence that takes into account the seven years Khodorkovsky has already served and gives him probation (with an almost certain “understanding” that he leave the country immediately upon release). Finally, there is dosledovanie (or “supplemental investigation”), under which the judge, while not dismissing the case, would send it back to the prosecutors requesting additional evidence. This latter outcome would amount to a face-saving (for the state) acquittal, since there is little possibility of any new evidence turning up in the case.

Such a disparity of possible outcomes is not due to legal intricacy. Were the case to be decided on the merits, Danilkin could have read a verdict after a lunch break. The state’s case is beyond a sham. It is nothing short of bizarre. “Arrested” in 2007, while serving an eight-year sentence for tax evasion and fraud, Khodorkovsky and his business partner, Platon Lebedev, were charged with stealing 350 million tons of oil from their company’s subsidiaries, of which, as prosecution has admitted, Yukos was a legal owner. Furthermore, it has been established in the course of the trial that Yukos paid taxes on the profit from the sale of the allegedly “embezzled” oil—despite the fact that Khodorkovsky and Lebedev have been found guilty of, and are serving jail time for, among other things, not paying these very taxes, and Yukos was bankrupted, broken up, and sold at auctions to pay these alleged tax arrears. Another key charge against Khodorkovsky and Lebedev—the supposed theft of shares of Eastern Oil Company (Russian acronym VNK)—is something for which the statute of limitations expired two years ago. Yet whileadmitting as much in the closing argument, prosecutors still asked the judge to add seven to eight years to the sentence for this alleged crime.

No, law has nothing to do with it. Khodorkovsky’s fate is almost certainly being decided not in Judge Danilkin’s chambers, but in the Kremlin by two people: the openly reactionary prime minister, Vladimir Putin; and his protégé, the haltingly liberal president, Dmitri Medvedev. The diversity of the rumor mill’s forecasts about the verdict reflects the range of Moscow handicappers’ guesses about the current balance of power between these two men.

Foreign policy is likely to be Medvedev’s first line of argument for an acquittal or a “light” sentence. Medvedev can vividly imagine the West’s reaction to a harsh verdict in a case that was so blatantly rigged. The United States and the European Union will be jumping on his back and pounding hard. The detente in relations with the West will be imperiled. So, too, will be Russia’s prospects of joining the WTO, now within reach after 17 years of back-and-forth: For Russia to join, the U.S. Congress must first repeal the antiquated Jackson-Vanik amendment to normalize trade relations with Moscow—and, if Khodorkovsky is convicted, Congress will most certainly demur (even if the Obama administration dares to ask for repeal).

Putin is mindful of the foreign policy fallout, of course, but he is likely to feel that it would be a necessary and acceptable loss, and probably short-lived. The prime minister remembers how incensed and scared the West was when Russia invaded Georgia in August 2008. Yet not even seven months later, the U.S. pushed the “reset” button in its relations with Moscow; and this past September, barely past the second anniversary of the invasion, Secretary of State Hillary Clinton called for “expanded cooperation” between NATO and Russia, and NATO invited Medvedev to attend its summit in Lisbon on November 19 and 20 of this year. And that was after a war! So a sentence, Putin will probably reason, no matter how stiff, will be forgotten even sooner—especially if: as a response to the post-verdict howls from the West, Russia temporarily suspends the overflights of NATO planes carrying lethal supplies to troops in Afghanistan and, for good measure, hints at cancelling the “cancellation” of the sale of S-300 surface-to-air missiles to Iran. (Unlike Medvedev, a professor’s son, for Putin—a prol urchin from a rat-infested communal apartment in Leningrad, who grew up in the impoverished family of a worker at a railway carriage plant—toughness is the only way to earn respect.) As to the WTO: With oil already upward of $80 a barrel today, and bound to go higher after the U.S. claws its way out of the recession, does Russia really need it that badly?

Yet it is in domestic politics and economics where the verdict’s impact will be the deepest—and where the differences between the prime minister and the president are the most pronounced. First, the trial is deeply personal for Putin. Among other slights, Khodorkovsky reportedly told the then-president, in front of other oligarchs in a Kremlin meeting in February 2003, “Mr. President, your ministers are thieves.” (Many of those present read Khodorkovsky’s fate in the look on Putin’s face). But there is far more than that to Putin’s hatred of Khodorkovsky. From the prime minister’s perspective, Khodorkovsky was, is, and always will be an unrepentant enemy of the regime. Releasing him would be like Gorbachev bringing Sakharov back to Moscow from his Gorky exile in December 1986. For Putin, it all started then: the end of the beloved Fatherland, the Soviet Union, which Putin bemoaned as “the greatest geopolitical catastrophe of the twentieth century.” Despite the warnings from the Kremlin, Khodorkovsky insisted on funding the opposition—from left to right, from the Communists to the Yabloko party to the Union of Right Forces—making impossible the smooth functioning of the “power vertical” that Putin labored so hard to establish and that, in his view, has brought Russia stability through the Kremlin’s unchallenged ownership of politics. The problem disappeared once Khodorkovsky was arrested, convicted, and sent to a jail in Chita, next to Mongolia and China, nearly 4,000 miles from Moscow: Russia’s rich have been scared off of funding anyone or anything without the Kremlin’s permission.

Just as important, Khodorkovsky and Yukos were sabotaging Putin’s economic policy of re-claiming what Lenin used to call “the commanding heights” of the national economy, especially the crown jewels of Russia’s Soviet patrimony: oil and gas. Disregarding the Kremlin’s sharp turn toward economic re-centralization, Khodorkovsky continued to run Yukos as his private domain, “in the interest of the company shareholders” and Western investors. He was also planning to build a private pipeline to China, thus challenging the state’s monopoly on pipelines. To top it all, he came perilously close—the gall!—to selling a large stake of Yukos to Chevron or ExxonMobil.

For Putin, Russian oil and gas are the foundation of the country’s progress, prosperity, and national security—today and 50 years from now. And it is the Russian state, not people like Khodorkovsky, who is the real owner of Russia’s hydrocarbon trove. While nationalizing Yukos, Putin permitted other private oil companies to operate, provided their owners understood that they were managing the national wealth, not owning it. Khodorkovsky’s first conviction was a reminder of the rules of the game. It now bears a repetition.

For Medvedev, who has decried the Russian economy as “chronically backward” and “primitive,” precisely because of its dependence on “raw materials,” Khodorkovsky is surely also a symbol—of what he has called “legal nihilism,” the “disdainful attitude toward court and law” and “extra-legal influence on courts’ actions.” (Like Putin, Medvedev is a lawyer; unlike Putin, he actually practiced, serving as a counsel to some of Russia’s top corporations.) The Russian president knows that a conviction would announce to hundreds of thousands of government functionaries: Go on blackmailing and extorting entrepreneurs all over Russia—and no court will ever interfere with you. How many more Russian-born innovators—like this year’s Nobel Prize winners Konstantin Novoselov and Andre Geim—will leave after this sentence is passed? (When asked what might induce him to go back to live and work in Russia, Geim answered: “Reincarnation.”)In the business community, already nauseated by some of the world’s worst corruption (which Medvedev has deplored as “chronic” and “eating away” at Russia), and semi-paralyzed with fear of hellish “pre-trial detention” for those who refuse to pay up, how many entrepreneurs will transfer even more capital abroad, investing there or just parking the money in Swiss banks? Already, 80 percent of investment in Russia is done by the state. How much higher will the number be after the sentence? 85? 90?

Even more important, the Khodorkovsky verdict will be closely watched by Medvedev’s core political constituency: the emerging Russian middle class, especially its civic vanguard, the “new protesters,” who turn out from Kaliningrad to Vladivostok to demand that the government respect its own laws, who demonstrate against corruption and unelected regional governors. It is their pain that Medvedev professed to feel when he railed against “nonfreedom” (nesvoboda) and the people’s “defenselessness” in the face of “arbitrariness” from authorities. It is them he has sought to encourage with talk of a law-abiding state and the virtues of “modernization” founded on “humanistic values,” freedom, “responsibility,” and individual success. It is them, he knows, he will betray and deeply disappoint if the Khodorkovsky trial ends on so shamelessly false a note. What would he tell them? What sort of credibility would his vision of a new Russia—a Russia of free and prosperous citizens with dignity and initiative—have?

And, since “modernization” was by far the most notable plank in his public rhetoric and the idea that most sharply distinguishes him from Putin, what would be left of his putative 2012 presidential electoral platform? What would he be then: a mere foil for Putin’s reelection in 2012—a pitiful prop to make the coronation of Tsar Vladimir I, set to rule for two six-year terms until 2024, look like a competitive race?

Throughout Russian history—from Ivan the Terrible to Peter to Stalin to Brezhnev—a show trial (or a public execution) has been the state’s tool of choice for announcing the end of a political regime and the arrival of a new elite, to tell subjects where the country is headed and to remind them who’s the boss. Prior to the Khodorkovsky affair, the last such political watershed was the trial of writers Andrei Sinyavsky and Yuli Daniel in 1965 and 1966, which marked the end of Khrushchev’s thaw. Yet Khrushchev was already out of power for over a year then, having been removed by a coup. A guilty verdict and a long sentence for Khodorkovsky will gut Medvedev’s thaw whilehe is still in office. Khrushchev’s fate appears vastly preferable.

Leon Aron is Director of Russian Studies at the American Enterprise Institute. His book about ideas and ideals that inspired and shaped the 1987-1991 Russian revolution will be published by Yale University Press next year.